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<ul><li><keyword id="19896911" type="General" weightage="20" keywordseo="Reliance-Jio" source="keywords" meta.keywordsubtype="org" meta.entityname="Reliance Jio" meta.hostid="261" meta.entityid="Reliance Jio">Reliance Jio</keyword> is reportedly gearing up to make its stock market debut.</li><li>As per analysts, Reliance Industries may announce an IPO for the telco at its upcoming AGM.</li><li>The <keyword id="7784314" type="General" weightage="100" keywordseo="Reliance-Jio-IPO" source="Orion">Reliance Jio IPO</keyword> will emerge as the biggest IPO in India.</li></ul> Mukesh Ambani-led Reliance <keyword id="19906886" type="General" weightage="20" keywordseo="jio" source="keywords">Jio</keyword> might be gearing up for an initial public offering (IPO), which is expected to emerge as the country’s largest stock market debut, beating the state-owned Life Insurance Corporation of India’s listing. Jio had recently announced a<a href="https://www.businessinsider.in/business/telecom/news/reliance-jio-and-airtel-price-hike-new-plans-and-how-you-can-save-money/articleshow/111331794.cms"> tariff hike</a>, increasing the prices of its prepaid plans by up to 25%. This was followed by Airtel and Vi announcing a<a href="https://www.businessinsider.in/business/telecom/news/jio-vs-airtel-vs-vi-prepaid-plans-comparison-plan-benefits-and-price-comparison-after-tariff-hike/articleshow/111512587.cms"> price increase</a>. In addition to increasing the prices, the company also moved its unlimited 5G benefit to premium plans that offer users with 2GB or more data per day. With this, the company is aiming to increase its average revenue per user (ARPU), a key metric that will make its shares more attractive to investors. These measures, according to a<a href="https://economictimes.indiatimes.com/markets/ipos/fpos/tariff-hikes-and-5g-monetisation-moves-hint-jios-headed-for-ipo/articleshow/111500671.cms"> report</a> by ET could be an indication that the telco is gearing up for an IPO. As per analysts, Reliance Industries is expected to make an announcement regarding the <keyword id="6059106" type="General" weightage="20" keywordseo="jio-ipo" source="Orion">Jio IPO</keyword> at its upcoming annual general meeting (AGM) in August. "Rising focus on monetisation could be a precursor to its imminent listing,” according to brokerage firm Jefferies. <h2>Jio IPO will be India’s biggest stock market debut</h2>If Reliance Jio makes its stock market debut, it will emerge as the biggest stock market listing in India. Existing rules state that companies that are valued at ₹1 lakh crore or more need to sell at least 5% during an IPO. Jio is currently valued at $133 billion (₹11.11 lakh crore as per Jefferies. A 5% stake sale would put the IPO at around ₹55,000 crore, beating LIC’s ₹21,000 crore IPO. Hyundai Motor India Limited (HMIL) recently<a href="https://www.businessinsider.in/stock-market/news/hyundai-motor-india-files-draft-papers-with-sebi-for-indias-biggest-ipo/articleshow/111014559.cms"> filed</a> its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO) to raise around $3 billion (₹25,000 crore). SEE ALSO: <a href="https://www.businessinsider.in/business/telecom/news/jio-vs-airtel-vs-vi-prepaid-plans-comparison-plan-benefits-and-price-comparison-after-tariff-hike/articleshow/111512587.cms">Jio vs Airtel vs Vi recharge plans comparison – plan benefits and price comparison after tariff hike</a> <a href="https://www.businessinsider.in/business/telecom/news/reliance-jio-and-airtel-price-hike-new-plans-and-how-you-can-save-money/articleshow/111331794.cms">Reliance Jio and Airtel price hike – new plans and how you can save money</a> <a href="https://www.businessinsider.in/tech/mobile/webstories/upcoming-smartphones-launching-in-india-in-july-2024/slidelist/111304902.cms">Upcoming smartphones launching in India in July 2024</a>

Reliance Jio IPO – Mukesh Ambani-led telco might be gearing up for India’s biggest IPO

<ul><li>The market regulator has tightened some regulations for companies that are launching IPOs to protect investor interest and prevent volatility in stock prices.</li><li>Along with new norms for IPOs, <keyword id="35210" type="General" weightage="20" keywordseo="sebi" source="Orion">SEBI</keyword> has come up with stringent norms for winding up of a mutual fund scheme.</li><li>Check out our <a href="https://www.businessinsider.in/bi-newsletter">weekly explainers</a> on the hottest topics and <a href="https://www.businessinsider.in/newsletters_signup.cms">sign up</a> if you like them.</li></ul>India’s financial markets regulator has come up with a slew of measures to tighten the rules for companies coming out with an initial public offering (IPO) to protect investor interest and prevent volatility in such stocks. The new regulations pertain to change in lock-in period of anchor investors, utilisation of IPO proceeds, restrictions on large shareholdings and a cap on sale of promoter shares via IPO. This comes after shares of several IPOs including Paytm and Zomato facing huge volatility after anchor investors sold shares right after their 30-day lock-in period leading to a huge fall in the share price. Note that the share sale by big institutional investors shakes investors’ confidence, which can lead to hasty selling by investors. Securities and Exchange Board of India (SEBI) is trying to prevent this by increasing the lock-in period to 90 days from 30 days. Anchor investors can only sell 50% of their holding after 30 days. Anchor investors are institutional investors who are allotted shares just before an IPO opens for subscription. The market regulator has also addressed the ongoing trend of promoters selling their entire stake in the company through IPO. When promoters of companies or rather startups that are not doing well financially sell their entire stake in the company, it is bound to shake investor confidence in the IPO. From now, shareholders with over 20% stake can sell only half of its shares through the IPO. Here are the key changes put forward by SEBI: <ul><li>New regulation restricts large shareholders (with more than 20% stake) from selling their entire stake in the company. Now they can only sell half of their overall shareholding.</li><li>Companies can only use 25% of the IPO proceeds for unidentified acquisitions in the draft red herring prospectus (DRHP). This comes after companies not disclosing usage of IPO proceeds in detail.</li><li>Existing lock-in period of 30 days for anchor investors shall continue only for 50% of the holdings, the remaining 50% shares can only be sold after 90 days.</li><li>About 33% of the portion will be reserved for non-institutional investors (NIIs) with investment between ₹2 lakh - ₹10 lakh.</li><li>Remaining 66% of the portion will be reserved for NIIs with more than ₹10 lakh investment.</li><li>Winding up of mutual fund schemes would now be possible only after the consent of majority unitholders. </li></ul>SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/cryptocurrency/news/sebi-doesnt-want-mutual-funds-diving-into-crypto-assets-at-least-until-the-crypto-bill-is-finalised/articleshow/88563302.cms">India’s market watchdog warns mutual funds to stay away from crypto assets at least until regulations come in</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/urban-company-ola-uber-are-not-the-best-places-for-gig-workers/articleshow/88561764.cms">Urban Company is not the best place for gig workers anymore and Ola, Uber are the worst</a>

SEBI comes out with stringent norms to save IPO investors from losing big money

The <keyword id="6354977" type="General" weightage="50" keywordseo="supreme-court" source="Orion">Supreme Court</keyword> will hear SEBIs petition, in an open court, seeking review of its August 5 judgment, which directed the market regulator to share certain documents with Reliance Industries Limited (RIL). A bench headed by Chief Justice U.U. Lalit and comprising Justices J.K. Maheshwari and Hima Kohli said: "Considering the facts and circumstances on record and the submissions advanced in the review petition, we deem it appropriate to allow application for listing of the instant petition in open court. Let this review petition be listed in court on October 12, 2022." <keyword id="35210" type="General" weightage="20" keywordseo="SEBI" source="Orion">SEBI</keyword> has refused to entertain RIL's request to share the privileged documents on the grounds that under the Sebi (Settlement Proceedings) Regulations, the accused company has no right to seek information from it. The <keyword id="6356229" type="General" weightage="80" keywordseo="apex-court" source="Orion">apex court</keyword>, in its judgement, had rejected this stand of the market regulator. RIL had claimed that documents will exonerate it and its promoters from criminal prosecution initiated in a case related to the alleged irregularities in acquisition of its own shares between 1994 and 2000. Last week, a bench headed by Justice Sanjiv Khanna had recused from hearing RIL's petition seeking to initiate contempt proceedings against SEBI for failing to provide certain documents to the company. On August 5, a bench led by then Chief Justice N.V. Ramana had said: "The approach of SEBI, in failing to disclose the documents, also raises concerns of transparency and fair trial. Opaqueness only propagates prejudice and partiality. Opaqueness is antithetical to transparency." The top court had said the market regulator should show fairness and furnish documents sought by RIL, and SEBI has a duty to act fairly, while conducting proceedings or initiating any action against the parties. RIL filed a contempt petition as SEBI has not shared three documents -- the two legal opinions by former apex court judge B.N. Srikrishna and former ICAI president Y.H. Malegam's report which examined the irregularities. The company claimed SEBI cannot continue to resist the production of these documents and it had also sent a notice to the regulator saying if documents were not received by August 18, then it will establish that SEBI does not want to comply with the apex court's judgment. In 2002, Chartered Accountant S. Gurumurthy filed a complaint with SEBI alleging irregularities by RIL, its associate companies and their directors/promoters, including <keyword id="3820" type="General" weightage="80" keywordseo="mukesh-ambani" source="Orion">Mukesh Ambani</keyword> and his wife, Nita; <keyword id="9171" type="General" weightage="80" keywordseo="anil-ambani" source="Orion">Anil Ambani</keyword> and his wife, Tina; and 98 others. The complaint cited the issue of two preferential placement of non-convertible debentures in 1994. SEBI had alleged that RIL along with Reliance Petroleum had circuitously funded the acquisition of its own shares in violation of the Sections 77 and 77A of the Companies Act, 1956. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/markets/news/sebi-tightens-disclosure-norms-for-ipo-brings-mutual-fund-transactions-under-the-gambit-of-insider-trading-rules/articleshow/94577801.cms">SEBI tightens disclosure norms for IPOs, brings mutual fund transactions under the gambit of insider trading rules</a> <a href="https://www.businessinsider.in/tech/news/jio-will-launch-5g-for-the-entire-country-by-december-2023-mukesh-ambani/articleshow/94579338.cms">Jio will launch 5G for the entire country by December 2023: Mukesh Ambani</a>

SC to hear SEBI's review petition against RIL on Oct 12

<keyword id="112429" type="ORGANIZATION" weightage="100" keywordseo="Securities-Exchange-Board-of-India">Securities &amp; Exchange Board of India</keyword> (<keyword id="35210" type="ORGANIZATION" weightage="100" keywordseo="sebi">SEBI</keyword>) is under plans to discuss options for investors to exit companies if the promoters fail to use money raised through initial public offerings (IPOs) for the stated purposes. This step is in line with Section 13 (8) of the Companies Act, 2013, which says that a company left with unutilised funds after raising money from the public cannot change the objects stated in the prospectus; this can happen only when a special resolution is passed and the promoters offer dissenting shareholders a way out. 
 
This would be the first meeting of the board, after merging with Forward Markets Commission, the former commodities market regulator. The board now has new members - Shaktikanta Das, secretary in the department of economic affairs, Tapan Ray, secretary in the Ministry of Corporate Affairs, and part-time member Arun Sathe. 
 
Under the topic of discussion, the board would also have a discussion on tweaking of rules related to forfeiture of partly paid shares, meanwhile introducing an electronic platform for the issue of debt securities and providing a framework for green bonds. 
 
"It's a change from investing in the promoter alone to investing in the business. Scrupulous promoters may not have a problem, but unscrupulous promoters will certainly have," Suhail Nathani, a partner at Economic Laws Practice, told ET. 
 
Investment bankers are of the opinion that this change could have an impact on IPOs, leading to problems in meeting the minimum 25% public holding norm. "If there are onerous restrictions on alteration of end-use of funds, it would discourage potential high-growth companies to go for an IPO," said Mehul Savla, director of RippleWave Equity Advisors. "Companies may prefer to raise funds through private equity now and do an IPO later for providing exit to them. This could preclude investors from participating in the growth stage of company." 
 
The board would also discuss introducing entities called electronic book providers, which could be merchant bankers and will have to take prior approval from the regulator before they provide a platform for electronic services. 
 
India is going to be among the few countries that would move online for all debt issues. Presently, only equity sales and government bond auctions see electronic platforms. However, in future, this could be made mandatory for all issuances, leading to symmetry of information and an improvement in the transparency in sales. 
 
<a href="https://s.yimg.com/bt/api/res/1.2/iwuwov5V_OmU.V1zQDHvgw--/YXBwaWQ9eW5ld3NfbGVnbztmaT1pbnNldDtoPTM2MjtpbD1wbGFuZTtxPTc1O3c9NTEy/http://globalfinance.zenfs.com/images/IN_AHTTP_REUTERS_WRAPPER_BUS_NEW/2015-07-16T023713Z_2_LYNXNPEB6E17I_RTROPTP_3_INDIA-MARKETS-DABBA_original.jpg">Image source</a>

Investors to soon have an option to exit companies if funds raised via IPO not properly utilised says SEBI

<keyword id="35210" type="ORGANIZATION" weightage="100" keywordseo="sebi">SEBI</keyword>, the capital markets regulator of India, has sought clarification from four companies regarding their proposed IPOs. 
 These companies are <keyword id="1869462" type="COMPANY" weightage="100" keywordseo="Advanced-Enzyme-Technologies">Advanced Enzyme Technologies</keyword>, <keyword id="3257310" type="UNKNOWN" weightage="100" keywordseo="KPR-Agrochem">KPR Agrochem</keyword>, <keyword id="3257311" type="UNKNOWN" weightage="100" keywordseo="S-P-Apparels-and-Thyrocare-Technologies">S P Apparels and Thyrocare Technologies</keyword>. 
 
While SEBI has not disclosed the details of the clarifications that it seeks from these companies, it has said that it is awaiting response from their merchant bankers and lead managers. 
 
<a href="http://techstory.in/wp-content/uploads/2015/06/SEBI-logo.png">Image source</a>

SEBI wants some tough answers from 4 companies on their IPO plans

The government has appointed 10 merchant bankers including Goldman Sachs (India) Securities, Citigroup Global Markets India, and Nomura Financial Advisory and Securities India to manage the mega initial pub<keyword id="6367143" type="General" weightage="20" keywordseo="lic" source="Orion">lic</keyword> offering of country's largest insurer LIC. Other selected bankers include SBI Capital Market, JM Financial, Axis Capital, BofA Securities, JP Morgan India, ICICI Securities, and Kotak Mahindra Capital Co Ltd, a circular on the divestment department website said. "Government has finalised the book running lead managers and some other advisors for the <keyword id="8699517" type="General" weightage="20" keywordseo="ipo-of-lic" source="Orion">IPO of LIC</keyword>," DIPAM Secretary Tuhin Kanta Pandey tweeted. The disinvestment department had invited applications for the appointment of merchant bankers on July 15. Following this, 16 merchant bankers made presentations for managing listing and partial disinvestment of Life Insurance Corporation (LIC). The Department of Investment and Public Asset Management (DIPAM) is also in the process of appointing a legal adviser for the stake sale and the last date for putting bids is September 16. Actuarial firm Milliman Advisors LLP India has already been appointed to assess the embedded value of LIC ahead of the IPO, which is likely in the January-March quarter of 2022. The government is also mulling allowing foreign investors to pick up stakes in the country's largest insurer LIC. As per Sebi (Securities and Exchange Board of India) rules, foreign portfolio investors (FPI) are permitted to buy shares in a public offer. However, since the LIC Act has no provision for foreign investments, there is a need to align the proposed <keyword id="7922409" type="General" weightage="20" keywordseo="lic-ipo" source="Orion">LIC IPO</keyword> with Sebi norms regarding foreign investor participation. The Cabinet Committee on Economic Affairs had last month cleared the initial public offering proposal of Life Insurance Corp of India. The ministerial panel known as the Alternative Mechanism on strategic disinvestment will now decide on the quantum of stake to be divested by the government. "The potential size of the IPO is expected to be far larger than any precedent in Indian markets," the department had said. The listing of LIC will be crucial for the government in meeting its disinvestment target of Rs 1.75 lakh crore for 2021-22 (April-March). So far this financial year, Rs 8,368 crore has been mopped up through minority stake sales in PSU and the sale of SUUTI (Specified Undertaking of the Unit Trust of India) stake in Axis Bank. PTI JD SHW SHW

LIC IPO: Government picks 10 merchant bankers including Goldman Sachs, Citigroup Global and Nomura

Following a board meeting on 21 June, the Securities and Exchange Board of India (<keyword id="35210" type="ORGANIZATION" weightage="20" keywordseo="sebi">SEBI</keyword>) <a href="https://www.sebi.gov.in/media/press-releases/jun-2018/sebi-board-meeting_39324.html">unveiled a number of changes </a>in the country’s initial public offering (<keyword id="6354763" type="UNKNOWN" weightage="20" keywordseo="ipo">IPO</keyword>) rules as well as <keyword id="56788" type="ORGANIZATION" weightage="20" keywordseo="Governance">governance</keyword> norms. The move by the <keyword id="6544108" type="COMPANY" weightage="20" keywordseo="Capital-markets">capital markets</keyword> regulator was part of a concerted effort to make the IPO process easier and in alignment with the rules in other countries. The updated rules will be included in the recent Companies Act of 2014. They were based on the recommendations of panel of market experts led by Prithvi Haldea, the founder of the country’s first database on primary capital markets. Here are the major changes that SEBI made:- <ul><li>Companies looking to go public will only be required to provide financial accounts and <keyword id="49224" type="ENTERTAINMENT" weightage="20" keywordseo="Disclosure">disclosure</keyword>s for the three years prior to the issue, as opposed to five years, in line with international norms. The disclosure process will also be made less cumbersome as companies will only be required to submit their consolidated financial statements instead of both the standalone statements for group companies and the consolidated statements of the parent company. </li></ul><ul><li>The pricing band, or the envisioned share price, for a company’s rights offering can be made public two days prior to the IPO instead of five days earlier. This will help prevent wide deviations from the price band owing to market volatility.</li></ul><ul><li>The category of anchor investors, or institutional investors taking a large portion of shares in the offering, has been expanded to include mutual funds, insurers and venture capital funds in addition to investment banks. As a result, they can fill in for a shortfall in the contribution of a promoter if needed. Furthermore, to qualify as an anchor investor for the IPO of a small-and-medium-sized enterprises, a fund can invest a minimum of ₹20 million instead of ₹100 million.</li></ul>The regulator did, however, impose a few restrictions to prevent any fraud or tax evasion through IPOs. It expanded the definition of “promoter groups” to include immediate family members and relatives, and lowered the shareholding threshold for being categorised as a promoter group from 20% to 10%. Promoters are subject to higher regulatory scrutiny than public shareholders. Another strong year for IPOs? The new rules will likely encourage more companies to go public and tap capital markets for funds. In terms of IPOs, India had a solid 2017, with 38 offerings raising over ₹750 billion - nearly a threefold jump from 2016. However, the IPO market has been muted so far in 2018 in terms of deal value amid a deterioration in India’s macroeconomic fundamentals. While there have been 17 IPOs, they have only raised ₹221 billion. Ernst and Young, a consultancy, forecasts that the amount raised for the year will total around <a href="https://www.moneycontrol.com/news/business/ipo/ipos-to-raise-rs-35000-cr-in-2018-report-2614041.html">₹350 billion,</a> but the new rules could prove to be the boost the IPO market needs.

India’s market regulator has made the IPO process easier for companies

Capital market regulator <keyword id="35210" type="COMPANY" weightage="20" keywordseo="sebi">Sebi</keyword> is planning to come out with framework on special purpose acquisition companies (SPACs), which will enable listing of startups on domestic stock exchanges, sources said on Thursday. The regulator is expected to put in place guidelines in this regard next week, they added. SPACs or blank cheque companies are formed to raise capital in an initial public offering (IPO) with the purpose of using the proceeds to identify and merge with a target company. SPACs are usually formed by private equity funds or financial institutions, with expertise in a particular industry or business sector, with investment for initial working capital and issue related expenses. Such companies have recently become popular in the US. There has been increasing demand that SPACs should be allowed in <keyword id="3658" type="LOCATION" weightage="20" keywordseo="India">India</keyword> as well. Under the framework, Sebi may put in place a separate set of regulations on SPAC, whereby detailed listing rules would be provided for such firms. This would include a minimum threshold size for an IPO, sources said. The regulator is expected to provide qualifying criteria for sponsor to ensure only seasoned and sophisticated individuals, with senior management level business and public company experience are allowed as a sponsor for an IPO through a SPAC vehicle. The founder or sponsor might be required to invest a minimum amount of seed capital and remain invested even post de-SPAC for a specific period of time under the new framework. Vikas Bagaria, Partner for Audit and Assurance at <keyword id="6356108" type="COMPANY" weightage="20" keywordseo="deloitte-india">Deloitte India</keyword> said that a founder or sponsor should remain invested for a period ranging from 12 months to 18 months post reverse merger of the target company with the SPAC. Further, they must hold equity position in the merged entity between 10 per cent and 20 per cent post de-SPAC, he added. According to him, SPAC vehicle should be be given 24 months to 36 to complete the acquisition. He, further, said that an opportunity should be given to the dissenting shareholders to redeem the investment in case the individual investors do not approve the merger proposed by the SPAC sponsor. The SPAC listing rules may define the requirement of due-diligence, audits, controls framework on financial reporting to be included in the draft papers related to the target operating companies for pre-clearance with the Sebi before the merger is taken-up for approval from the SPAC shareholders. The framework is likely to impose a condition not to proceed with the proposed qualifying acquisition if more than a pre-determined percentage of public holders of securities vote against the proposed acquisition. Public holders of securities who vote against a qualifying acquisition that is completed might be allowed to redeem their securities for their pro-rata portion of the escrow funds. Bagaria said that various changes in the current regulatory framework are required to allow reverse merger of the private operating company with a SPAC. This included amendments in the Companies Act, 2013, for defining SPAC vehicles as a separate entity, and amendments to delisting rules to permit delisting of SPAC not able to complete the acquisition within a define period of 24 months to 36 months, he added. At present, Sebi (Issue of Capital and Disclosure Requirements) Regulations do not provide listing options for blank cheque companies. Also, it has defined thresholds resulting in only operating companies being eligible for an Indian IPO. According to market experts, while SPACs have several advantages, they also raise various regulatory concerns. For public shareholders, SPACs give the advantage of investing along with the sponsors in the SPAC like private equity type transactions. The advantage for the sponsor is that it allows rapid deployment of capital to take advantage of opportunities. It also helps the target company acquired by the SPAC going public during periods of market instability or volatility in traditional IPO markets. According to Bagaria, Indian unicorn privately owned companies valued in excess of USD 1 billion is booming in sectors like <keyword id="2461546" type="COMPANY" weightage="20" keywordseo="FinTech">fintech</keyword>, ed-tech, healthcare, consumer, food delivery and mobility, e-commerce. He, further, said that these new age companies are attracting capital and are now at the forefront of India's startup ecosystem. However, current listing options available to these unicorn firms in India is limited. "The SPAC framework will provide significant opportunities allowing public and retail investors to participate in acquisition of private operating companies by an Indian SPAC investment vehicle," Bagaria said. In addition, it will offer liquidity and visibility to the founders and private company investors and will provide access to seasoned management and financiers for a private company, he added. In March, Sebi had formed a group of experts to examine the feasibility of introducing SPACs like structures in India, sources had said. The group, formed under Sebi's Primary Market Advisory Committee (PMAC), was asked to submit its report at the earliest. SEE ALSO: <a href="https://www.businessinsider.in/cryptocurrency/news/heres-how-chinas-2021-crypto-crackdown-in-2021-differs-from-the-2017-ban/articleshow/83802778.cms">Here’s how China’s 2021 crypto crackdown in 2021 differs from the 2017 ban</a> <a href="https://www.businessinsider.in/business/startups/news/zomato-is-seeking-a-8-billion-valuation-in-its-ipo-does-it-make-sense/articleshow/83801848.cms">There are a few reasons why Zomato wants $8 billion valuation from its IPO -- here's a look at if it makes sense</a>

Sebi plans to come out with framework for SPACs to enable listing of startups on domestic stock exchanges, say sources

On March 1, India’s <keyword id="6378893" type="UNKNOWN" weightage="20" keywordseo="market-regulator">market regulator</keyword> proposed a series of changes to norms guiding <keyword id="6373267" type="UNKNOWN" weightage="20" keywordseo="Independent-Directors">independent directors</keyword> on the boards of companies. One of the biggest changes, in <a href="https://www.sebi.gov.in/media/press-releases/mar-2021/sebi-issues-consultation-paper-on-review-of-regulatory-provisions-related-to-independent-directors-_49337.html">the consultation paper from the Securities and Exchange Board of India</a> (<keyword id="35210" type="COMPANY" weightage="20" keywordseo="sebi">SEBI</keyword>), is the need for approval from <keyword id="6418655" type="UNKNOWN" weightage="20" keywordseo="minority-shareholders">minority shareholders</keyword> to appoint or remove an independent director from the board. Independent directors are appointed as watchdogs who are expected to ensure balanced decisions by the <keyword id="136326" type="COMPANY" weightage="20" keywordseo="Board-of-Directors">Board of Directors</keyword> and to deter fraud. In India, one out of every three directors in every board has to be ‘independent’ and they are appointed for a period of 5 years. “In the recent past, some listed companies have faced shareholder resistance in having non-executive directors re-appointed, but these are relatively rare in the Indian context,” Arka Mookerjee, partner at law firm J Sagar Associates, said in a statement to Business Insider. The new provision is intended to ensure that small shareholders are not shortchanged but there may be a way around, still. “The provision may be somewhat diluted in practice through the secondary approval route through special resolution after 120 days,” Mookerjee added. The regulator wants to increase the stake for independent directors SEBI has also proposed profit-linked commissions and long-term stock options for independent directors. In the past, India has seen a small pool of people being roped in for this role. Consequently, their compensation had gone up significantly. The number of independent directors charging over ₹1 crore from a company, annually, had <a href="https://economictimes.indiatimes.com/news/company/corporate-trends/more-independent-directors-earn-in-crores-now/articleshow/72376510.cms?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=Marketnewsletter&amp;ncode=a5ac7b13cca2a539099c8159781874b1">reportedly</a> gone up over four fold from 21 at the end of March 2013 to 89 at the end of March 2019. By giving them long-term stock options, the regulator may want to increase the director’s vested interest as a stakeholder in the company, which, according to Mookerjee, “would ultimately change the viewpoint of the directors and their relationship with the listed company.” Independent directors need to earn the shareholders’ trust From the <keyword id="10958" type="LOCATION" weightage="20" keywordseo="Satyam">Satyam</keyword> scam that exploded in 2009 to the one at IL&amp;FS (in 2017), and beyond, the role of independent directors has come under scrutiny too many times. A <a href="https://www.thehindu.com/business/Industry/independent-directors-not-really-independent/article33419736.ece">recent survey</a> showed that nearly four out of every five shareholders suspect the ‘independence’ of these directors. As Prithvi Haldea, the founder chairman of <keyword id="198574" type="COMPANY" weightage="20" keywordseo="Prime-Database">Prime Database</keyword> (a firm that provides data on Indian capital markets), recently argued, the position of independent director is often filled by, what he calls, <a href="https://www.financialexpress.com/opinion/independent-directors-a-new-paradigm-in-corporate-governance/2136744/">“home directors”</a> ⁠i.e. friends, ex-colleagues, extended relatives, and, even, neighbours. “The independence of such promoter-appointed independent directors is questionable as it is unlikely that they will stand-up for minority interests against the promoter,” Kalpana Unadkat and Pranay Bagdi at law firm <keyword id="558469" type="COMPANY" weightage="20" keywordseo="Khaitan-Co">Khaitan &amp; Co</keyword>, <a href="https://www.acc.com/resource-library/top-ten-issues-corporate-governance-practices-india">wrote in 2017</a>. The authorities have brought in a series of changes, in recent years, to the norms to provide some added sanctity to the role. Some of the restrictions in place to ensure the neutrality of an independent director include, <ul><li>a person cannot continue as an independent director for more than 2 consecutive terms. </li><li>a person can be an independent director in, at most, seven listed companies at a time.</li><li>any vacancy in the office of independent director shall be filled by the next board meeting, or within 3 months of such vacancy, whichever is later.</li></ul>In October 2019, an online database of all existing and eligible independent directors was created. The government also introduced a proficiency qualification examination for independent directors, mandating a minimum score of 60% for any individual to qualify for appointment. The move <a href="https://www.moneylife.in/article/independent-directors-exam-marksheet-dikhao/61993.html">faced</a> a lot of backlash from the industry. SEBI has invited comments from the public, on its latest proposals, until April 1, 2021. SEE ALSO: <a href="https://www.businessinsider.in/india/news/new-electricity-late-payment-surcharge-rules-announced-but-consumer-electricity-bills-may-not-decrease/articleshow/81286847.cms">New electricity late payment surcharge rules announced – but consumer electricity bills may not decrease</a> <a href="https://www.businessinsider.in/stock-market/news/how-to-check-allotment-status-of-heranba-industries-ipo/articleshow/81286739.cms">Heranba Industries IPO: Here is how to check share allotment status</a> <a href="https://www.businessinsider.in/india/news/indians-are-heading-back-to-parks-supermarkets-and-pharmacies-but-malls-and-theatres-are-not-on-the-priority-list/articleshow/81271614.cms">Indians are heading back to parks, supermarkets and pharmacies — but malls and theatres are not on the priority list</a>

You Searched For "SEBI ipo rules" and got 9 results

Reliance Jio IPO – Mukesh Ambani-led telco might be gearing up for India’s biggest IPO

Sourabh Jain

SEBI comes out with stringent norms to save IPO investors from losing big money

Bhakti Makwana

SC to hear SEBI's review petition against RIL on Oct 12

IANS

Investors to soon have an option to exit companies if funds raised via IPO not properly utilised says SEBI

BI India Bureau

SEBI wants some tough answers from 4 companies on their IPO plans

BI India Bureau

LIC IPO: Government picks 10 merchant bankers including Goldman Sachs, Citigroup Global and Nomura

PTI

India’s market regulator has made the IPO process easier for companies

Dilsher Dhillon

Sebi plans to come out with framework for SPACs to enable listing of startups on domestic stock exchanges, say sources

PTI

Companies in India may soon need approval from minority shareholders to appoint or remove an independent directors

Sriram Iyer

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